CRM suppliers Kana Software and Entellium are both launching hosted services this week.

Siebel OnDemand, RightNow and NetSuite are also looking at offering hosted services, a field that is still dominated by Salesforce.com.

Erin Kinikin, vice-president and research director at Forrester Research, said sales managers want to make sales more effective but they do not want to spend six months with IT to design a solution. "Hosted is a way around IT," he added.

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H A Schade, vice-president of products at Kana, said the company created the hosted version, the same as the on-premise solution, in response to a "very large" customer who told Kana it liked its products but wanted Kana to manage it.

Kana focused mainly on customer service applications for financial services and telecommunications industries and is launching hosted versions of its iCare Suite of Service Resolution Management, Response Live solution for both collaboration and text chat.

"Co-browse is used by banks providing customer service while customers are filling out loan applications to guide them through that experience," Schade said.

Response Live will be followed by Kana's e-mail response management applications and then its knowledge management solution.

Kana will still offer an on-premise solution, plus the hosted version at about $400 a month per seat as well as an on-premise term licence instead of a perpetual licence.

While Kana made the move to offering a hosted version in response to some of its largest customers, Entellium chief executive officer Paul Johnston, another CRM provider launching a hosted version this week, said that hosted applications appeal more to the mid-market which is looking to lower its total cost of ownership.

Entellium, focused exclusively in the Asian market up until now, is targeting midsized companies with hosted sales, marketing and customer service modules in North America.

Other than the monthly subscription price ranging from $10 to $67 a seat per month, Johnston said the Entellium integrated platform for all of its applications also lowers the TCO.

"All of our solutions are built using the same workflow engine. We can organise and orchestrate all of the sales, marketing, and customer service processes," Johnston said.

Hosted CRM is moving to second-generation hosted offerings, he said. The first generation lacked the ability to customise applications for industry-specific business processes.

"Now the direction of the industry is to provide vertical solutions for each area. If you don't have a workflow capability built within your product and the capability to change the look and feel of the screen and change the business rules, how can you offer vertical solutions?" asked Johnston.

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